Demystifying IRS Notice CP90: What You Should Know

Receiving a notice from the Internal Revenue Service (IRS) can be a daunting experience, and one notice that can raise significant concerns is the CP90 notice. This official communication from the IRS indicates that they intend to levy your assets to satisfy a tax debt. While it may sound alarming, understanding the purpose, implications, and steps to take when you receive an IRS Notice CP90 can help you navigate the situation with confidence and address your tax obligations effectively. In this article, we will demystify IRS Notice CP90 and provide valuable insights into what you should know if you find yourself facing this notice.

What Is IRS Notice CP90?

IRS Notice CP90 is a formal notification sent by the IRS to inform a taxpayer that they intend to levy their assets to collect an outstanding tax debt. This notice is typically issued after the IRS has made multiple attempts to communicate with the taxpayer regarding the unpaid taxes, but the debt remains unresolved. The CP90 notice serves as a final warning before the IRS takes further collection actions.

Key Elements of IRS Notice CP90

• Intent to Levy: The primary purpose of the CP90 notice is to inform the taxpayer of the IRS’s intention to levy their assets. A levy allows the IRS to legally seize and sell property, including wages, bank accounts, real estate, vehicles, and other assets, to satisfy the tax debt.
• Tax Amount Owed: The notice specifies the total amount of tax, penalties, and interest owed by the taxpayer. This amount represents the outstanding debt that the IRS seeks to collect.
• Due Date: IRS Notice CP90 includes a due date by which the taxpayer must either pay the full amount owed or take appropriate action to address the debt, such as setting up a payment plan.
• Payment Instructions: The notice provides instructions on how to make a payment, including payment methods and addresses where payments should be sent.
• Rights and Options: The CP90 notice also outlines the taxpayer’s rights and options, including the right to appeal the IRS’s decision, request a collection due process (CDP) hearing, or enter into a payment arrangement.

Reasons for Receiving IRS Notice CP90

There are several reasons why a taxpayer may receive IRS Notice CP90. Some common scenarios that can lead to the issuance of this notice include:

• Unpaid Tax Debt: The most common reason for receiving a CP90 notice is having an outstanding tax debt that has not been resolved through previous IRS notices or attempts to collect payment.
• Failure to Respond: If a taxpayer fails to respond to prior IRS notices, such as CP14 (Notice of Unpaid Taxes) or CP501 (Reminder Notice), indicating unpaid taxes, the IRS may escalate collection efforts by sending a CP90 notice.
• Disputed Tax Debt: In cases where a taxpayer disputes the amount of tax owed or believes that the IRS’s assessment is incorrect, they may still receive a CP90 notice if the dispute remains unresolved.
• Delinquent Tax Returns: Failure to file required tax returns can also lead to IRS collection efforts, including the issuance of Notice CP90.

Understanding the Impact of IRS Notice CP90

Receiving IRS Notice CP90 is a significant event with serious implications. Here’s what you should know about the impact of this notice:

• Legal Authority: The IRS has the legal authority to levy your assets to collect unpaid taxes. This means they can take action to seize your wages, bank accounts, real estate, vehicles, and other property to satisfy the debt.
• Asset Seizure: If you do not take prompt action to address the tax debt or arrange for payment, the IRS can proceed with the levy process, resulting in the seizure and sale of your assets to cover the amount owed.
• Impact on Credit: A tax lien, which may result from the IRS’s collection efforts, can negatively affect your credit report and make it challenging to obtain loans or credit in the future.
• Interest and Penalties: Interest and penalties continue to accrue on the unpaid tax debt until it is fully paid, potentially increasing the total amount you owe over time.

Responding to IRS Notice CP90

When you receive IRS Notice CP90, it is essential to take immediate action to address the situation and prevent asset seizure. Here are the steps to consider when responding to this notice:

• Review the Notice: Carefully read the entire CP90 notice to understand the specific tax debt, penalties, and interest owed. Take note of the due date provided in the notice.
• Verify the Amount Owed: Verify that the amount specified in the notice is accurate by comparing it with your own tax records and calculations.
• Contact the IRS: If you agree with the amount owed and can pay the full debt by the due date, contact the IRS to arrange for payment. You can choose from various payment methods, including electronic funds transfer, check, money order, or credit card.
• Request a Payment Plan: If you are unable to pay the full amount owed, you can request an installment agreement or payment plan with the IRS. This allows you to make monthly payments to satisfy the debt gradually.
• Explore Other Options: Depending on your financial situation, you may explore other options, such as an offer in compromise (OIC), which allows you to settle your tax debt for less than the full amount owed. However, OIC eligibility criteria are strict, and approval is not guaranteed.
• Seek Professional Guidance: Consider seeking assistance from a tax professional, such as a certified public accountant (CPA) or tax attorney, to help you navigate the process, negotiate with the IRS, and explore potential options for resolving the tax debt.
• Request a Collection Due Process (CDP) Hearing: If you disagree with the IRS’s actions or believe that they have made an error, you can request a CDP hearing. This provides an opportunity to appeal the proposed collection actions and present your case to an independent appeals officer.
• File Unfiled Tax Returns: If you have unfiled tax returns, it’s crucial to file them promptly to address your compliance issues and prevent further IRS collection efforts.
• Stay Informed: Keep copies of all correspondence with the IRS, including receipts for payments made. Stay informed about your rights as a taxpayer and the options available to you.

Conclusion

Receiving IRS Notice CP90 is a serious matter that requires immediate attention and action. Ignoring or delaying a response can lead to asset seizure and further financial complications. By understanding the purpose and implications of the notice, verifying the accuracy of the debt, and exploring available options, you can take proactive steps to address your tax obligations and work towards a resolution with the IRS. Seeking professional guidance when necessary can also be invaluable in navigating the complexities of tax debt collection and finding the best path forward. Remember that addressing the issue promptly is the key to resolving your tax debt and mitigating its long-term impact on your financial well-being.